Buildings Insurance

Buildings insurance is pretty much as it sounds: insurance that covers damage to the building itself. A more exact definition is insurance that covers everything you wouldn't take with you if you moved home. As well as the obvious stuff like the walls, roof, windows, and doors, it can also include permanent fixtures like fitted kitchen, bathroom suites, and hardwood floors.

It's important to remember that you should only insure your home for the amount it would cost to rebuild if it was destroyed (which is known as the "reinstatement value") - NOT for the amount you would get if you sold it as is.

The amount you would get if you sold it as is – known as the "market value" - includes, not just the cost of the building itself, but also the land on which it is built. Obviously, even if your home was destroyed by fire, the land it is built on will still be there. It can't be destroyed, so there would be little point insuring it anyway!

It can be very hard for someone not directly involved in the building industry to know what it would cost to rebuild any particular home. The best way is to employ the services of a trustworthy quantity surveyor, who will check out the building, and give you an estimated cost. If you simply guess it, you could well end up either over-insuring, or under-insuring your house – both of which will cost you in the long-term: If you are over-insured, you'll end up paying far more than you have to, without getting any extra benefit from it. And, if you are under insured, and your home is damaged or destroyed, your insurance policy may not pay out enough to actually cover the cost of repairing, or rebuilding, it.

Many insurers try to avoid a situation where you might be under insured by automatically increasing the amount of your cover every year in line with the inflation rate. This is known as "indexation". However, you shouldn't just rely on this to avoid under insuring your property, as the potential cost of rebuilding a damaged/destroyed home can be affected by many other factors too, not just inflation.

One specific example that often gets overlooked is any extension to a house; if your home has been extended, but you don't increase the amount of buildings insurance you have, there's a very good chance your policy won't pay out enough to include that in the event of a claim.

You should also bear in mind that most insurance companies will only provide buildings insurance over a certain amount, meaning you will always have to pay a minimum cost for your policy, regardless of the addition/subtraction of any particular features to/from the policy. Usually, a home must have a reinstatement value of at least €100,000, but, with some companies, the minimum figure can actually be much higher, especially in areas traditionally considered to be more-expensive.

Unless otherwise noted, most buildings insurance policies will cover damage to the structure of the house (walls, windows, the roof, etc.), as well as permanent fixtures (like bathroom suites, hardwood floors, etc.), and often outbuildings (like a garden shed or garage), as well as garden walls and gates. The causes of the damage for which the policy will pay out are usually restricted to things like fire, earthquakes, flooding, lightning, burglary, subsidence, leaking pipes inside the structure, falling trees, and impacts, such as a vehicle crashing into the building.

Ordinary wear-and-tear of the home is usually not covered (which, you should note, includes things like a leaky shower). Nor are extreme events like war and acts of terrorism.

You will also not be covered where the cost of any damage is less than your "excess", which is the minimum amount on any claim that you must always pay yourself (usually in the region of €150-€300). However, if you agree to a higher excess, most insurance companies will give you a substantial discount (since it means less risk for them). For example, if you agreed to cover the first €1,000 of any claim yourself, some insurers will give you hefty discounts of as much as 15 or 20%!